Paperwork! Just about anyone who has ordered or purchased goods and services for their institution, knows how daunting the process can be. Not only must end users complete paperwork to request resources, but procurement professionals must process each transaction before acquiring the goods or services, and accounts payable must reconcile the transactions to pay for them on the back end.

And the volume and cost of purchases is enormous. School operating budgets for such items as office equipment, maintenance, repair, operating supplies, computer equipment, service requests and personnel services total more than $100 billion annually. The National Association of Purchasing Management estimates that the cost of generating a single purchase order and getting it approved averages $150. Why so high? Often it’s because of the time-consuming process involved in completing multiple forms and following compliance procedures.

In a typical process, from the time an individual says, "I need something," until the requisition gets approved and executed by the purchasing department is four weeks — often just for standard items!

Because it often takes so long, so-called "rogue" buying is common. Users go outside of approved suppliers to buy goods and services more quickly, but pay prices higher than negotiated contracts or other buying guidelines set by the Purchasing Manager.

The net result is that most institutions do not realize the full benefits of aggregated buying and fewer still enjoy the benefits of technology-enabled workflow that can shorten the process to 24 to 72 hours.

Enter e-procurement
No college, university, independent school or K-12 school is immune from the need to be cost-efficient. e-Procurement presents a tremendous opportunity for educational institutions to reduce buying costs. Corporations that have redesigned purchasing processes and adopted e-procurement have found they can save 10 to 15% in hard dollars through aggregated buying and another 15 to 25% on "soft" costs associated with streamlining the overall process.

e-Procurement comes in many different flavors. It can be an IT application that links requisitioners, purchasing managers and others to speed authorizations. For others it is the ability to buy via the Web. And for others it is the ability to aggregate purchases through a buying cooperative or consortium. In fact, institutions realize the greatest benefits of e-procurement when all three key features are combined within one integrated system — aggregated buying, Web access and workflow automation.

By systematically managing purchasing and approvals, e-procurement strengthens management control while enabling institutions to empower more users to requisition goods and services.

e-Procurement effectively eliminates maverick buying, ensures compliance with school policies and institutionalizes your school’s best business practices.

e-Procurement can also improve buyer/supplier relationships. While the cost of purchased goods goes down in e-procurement, the cost to suppliers of interacting with buyers also falls significantly. Furthermore, when part of an e-procurement marketplace, suppliers gain access to a wide range of potential new customers. End users are more satisfied with e-procurement as well. They know the status of requests and receive approval sooner, so they get the goods and services they need faster.

What makes e-procurement work well?
There are more than 400 B2B electronic commerce providers active in the market today — many looking at the education market as a key segment in which to sell their product. What makes one e-procurement application better than another? Simplicity is one key.

Simple to install. The benefits of e-procurement will only benefit a school if it is up and running.

Simple to use. Core to the power of e-procurement is the ability to make it broadly available — to requisitioners, to purchasing professionals and to the suppliers, without which there would be no community in which to buy. Adoption is greatly enhanced if the application is intuitive and easy to use.

Simple to integrate with your environment. No institution wants another stand-alone application. e-Procurement works best when it can effectively integrate with existing systems such as ERP applications or other financial and information systems.

The power of the community or marketplace is another key to successful e-procurement. A critical mass of buyers and suppliers is imperative. The more buyers — and specifically the greater the alignment of their buying behavior — the greater will be the benefits of aggregated purchasing. But buyers alone don ’t make a marketplace. Making an e-procurement marketplace work means having the suppliers in the marketplace that matter to the buyers. Sometimes these are large horizontal suppliers of office supplies and computer equipment. But, more often, they are the small local suppliers, as well as the women-owned and minority-owned businesses — to which schools want to direct some of their purchasing. Without both the large and small buyers, the value of the e-procurement marketplace is diminished.

Finally, e-procurement works best when the IT staff, purchasing staff and financial staff work effectively together with the e-procurement provider on a solution that meets all of their needs, as well as those of the institutions they serve.